Global Journal of Management and Business Research Finance Volume 13 Issue 10 Version 1.0 Year 2013 Type: Double Blind Peer Reviewed International Research Journal Publisher: Global Journals Inc. (USA) Online ISSN: 2249-4588 & Print ISSN: 0975-5853

The Current Ethical Challenges in the Nigerian Commercial Banking Sector By Ayozie Daniel Ogechukwu The ederal Polytechnic llaro, Abstract - Ethics and morals are seen as personal view points. No minding the viewpoint, south ethical and moral values are very relevant in the banking industry. Ethics consist of certain rules and standards of conduct recognised as binding in a professional body, association or organisation, which is binding in the members. This paper discusses the relevant functions of commercial banks, and the ethical challenges in the performance of these functions. It evaluates the current ethical challenges in the banking industry, discusses the roles various regulatory agencies, have to play, in the adherence to ethical values, and advances solutions that will combat the aforementioned ethical and unethical challenges for the commercial banks to survive, ethical and moral values must be respected and adhered to, and sanctions meted out to erring individuals, that disobey the rules. This paper is descriptive in nature as it examines, the ethical issues, challenges and recommendations involved in ethical practices by commercial bankers in Nigeria. It proffers far reaching solutions to these ethical/unprofessional challenges in the commercial banking sector in Nigeria. Keywords : commercial bank, ethics, unethical activities, BOFIA act, poaching, balance sheet, engineering, round training, CIBN (chartered institute of bankers of nigeria), APCON (advertising practitioners council of nigeria). GJMBR-C Classification : JEL Code: E58, G21

TheCurrentEthicalChallengesintheNigerianCommercialBankingSector

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© 2013. Ayozie Daniel Ogechukwu. This is a research/review paper, distributed under the terms of the Creative Commons Attribution- Noncommercial 3.0 Unported License http://creativecommons.org/licenses/by-nc/3.0/), permitting all non-commercial use, distribution, and reproduction inany medium, provided the original work is properly cited.

The Current Ethical Challenges in the Nigerian Commercial Banking Sector

Ayozie Daniel Ogechukwu

Abstract - Ethics and morals are seen as personal view In the branch banking system, the head office of points. No minding the viewpoint, south ethical and moral the bank is located in the commercial nerve centre of values are very relevant in the banking industry. Ethics consist the country or political headquarters of the country or of certain rules and standards of conduct recognised as state of the promoter (Ogunbi and Ogunseye, 2005). binding in a professional body, association or organisation, 2013 Branches of the banks are spread across the nooks and which is binding in the members. This paper discusses the relevant functions of commercial banks, and the ethical crannies of the country but are connected online to the headquarter to facilitate smooth operation. The Nigerian ear challenges in the performance of these functions. It evaluates Y

the current ethical challenges in the banking industry, banking system can be seen as the branch banking

discusses the roles various regulatory agencies, have to play, system save for the establishment of the community 35 in the adherence to ethical values, and advances solutions banks. that will combat the aforementioned ethical and unethical The universal banking systems came into being challenges for the commercial banks to survive, ethical and as a fall out of the globalisation and internationalisation moral values must be respected and adhered to, and of the financial system. Under this procedure a bank is sanctions meted out to erring individuals, that disobey the established to perform some basic commercial, rules. This paper is descriptive in nature as it examines, the ethical issues, challenges and recommendations involved in merchant and developmental banking functions, in ethical practices by commercial bankers in Nigeria. It proffers addition to carrying out ancillary financial functions like far reaching solutions to these ethical/unprofessional insurance, stock broking, agency services and the likes. challenges in the commercial banking sector in Nigeria. From the above explanations, the Nigerian Keywords : commercial bank, ethics, unethical activities, banking system is graduating from the branch banking BOFIA act, poaching, balance sheet, engineering, round system to the more modern and much more rewarding training, CIBN (chartered institute of bankers of nigeria), universal banking system, so that it can work within the APCON (advertising practitioners council of nigeria). global thinking in the new world economics banking and C

financial order. () Commercial banks, the focus of this paper are retails banks that deal in short term money and credit a) The Nigeria Commercial Banking System and Ogunbi and Ogunseye(2005). They are seen as the Ethical Challenges institutions that deals in money and credit and receives Hassan K. (2000) sees the commercial banks as profit making oriented financial institutions set up for deposits from surplus spenders (which could be any of keeping and lending money and other valuation items the economic agents, household, firms or government) for the purpose of making profit. Commercial banks are repayable partly by cheque and partly by cash. joint stock establishments structured to conduct Commercial banks by their nature in a banking business; that includes the business of developing country like Nigeria perform some basic receiving deposits on current account, savings account function. or other similar accounts paying or collecting cheque Hassan (2000), Ogunbi and Ogunseye (2005), drawn by or other business as the governor of the Anyanwu (1993), Umoh (2004), Donli (2004) Central Bank of Nigeria may include as the functions of enumerated the functions of commercial banks in the commercial bank. Nigeria as thus; Ogunbi and Ogunseye (2005) opined that there are basically three types of banking system. These - Facilitating business transactions through the use of include, the unit banking system, which is a method cheques, where all the departments of the bank operate under the - Performing ancillary services like the issuing of same roof. The evidence of such a system is found in letters of credit, drafts, transfers on behalf of their

Global Journal of Management and Business Research Volume XIII Issue X Version I the Community Banks which are established and customers, bills drawn on the authority of letters of located in communities to serve the banking needs of credit; discount bills and promissory notes, the communities. They cannot branch out. - Commercial banks assist in the acquisition of stocks, shares either in the primary or secondary markets with their experts in their investment Author : Senior Lecturer Department of Marketing The Federal Polytechnic Ilaro Ogun State, Nigeria. banking units, they assist the customers to trade in E-mail : [email protected] the capital market.

© 2013 Global Journals Inc. (US) - They act as attorneys, executors and trustees acquisitions, portfolio re-structuring and especially where the memorandum of association diversification (Ogunbi, 2000). authorises it, or else they can take advantage of the - Commercial banks are agents in facilitating default clause under S. 38(1) of CAMA 1990. international transactions, through the procurement - Commercial banks act as agents and deposit of foreign currencies, travellers cheques and mobilisation through current (chequing) or demand affecting trade payments through their corre- deposit accounts, saving accounts or time or fixed spondent bank. accounts. - Finally, they give reference reports on the integrity - They are agents in safe-keeping of valuable goods, and financial standing of their customers where the documents and customer particulars. This can be customers are directly involved or indirectly through bailment – bailor – bailee relationship over requested to comment on their perceived bailed goods like jewelleries, certificate of assessment of their customer‟s capability to make occupancy, educational and academic certificates reference report or stand ad referees to other 2013 and transcripts. people or institutions. Among the Nigerian industrial sectors today, ear - They are agents of lending/credit creation on the Y satisfaction of core lending principles, such as one can say that the commercial banking industry is the most visible and arouses the one of the most public 36 suitability. Safety represents the fall back option or simply pure collateral. Ogunbi and Ogunseye interest (Adeyemo, 2012). This also raises the interest in (2005). Collateral takes the shape of stock or share the ethical challenges facing the banking industry. certificates, landed properties or life insurance Olisimbye (1999) opined that the banking sector has premium. Suitability deals with the situation where become of the most critical sectors and commanding the purpose of the loan does not antagonise the heights of the Nigerian economy with the wide prohibited areas i.e. the purpose of the loan should implications on the level and direction of economic be in conformity with government policy, e.g. a loan growth and transformation of Nigeria. But unfortunately to finance illicit trade or drugs or murder or any presently, the much respected, cherished and time other form(s) of illegality will not be acceptable. valued integrity and survivability of the basic functions of the Nigerian commercial banks have been called to - Commercial banks act as agents in the payment system. Through this process, rent and rates, question due to the unethical practices such like insurance premiums, periodic remittances to incessant frauds and accounting scandals. Ayozie professional institutions, insurance companies (2012), Adeyemo (2012), Oseni (2006) opined that the (direct debit system), children in academic incessant frauds in the commercial banking sector and C () institutions outside the home country or states, and unethical challenges stressed that the “spate of fraud in any other forms of standing instructions or direct the Nigerian commercial banking sector has lately debit system are performed. become a source of embarrassment to , as apparent in the seeming attempts of the law - Assisting in saving mobilisations and as a catalyst for capital formation which is necessary for enforcement agencies to successfully track down the culprits. investment in the economy. In the performance of these functions to their - Commercial banks facilitate trade and travels by customers, certain ethical issues are raised. The making foreign exchange transactions available at determination of right and wrong, positive or negative competitive rate. Ogunbi and Ogunseye(2004). performance, based on the individual or organisational - They encourage private, corporate and business involvement in the satisfaction of the banking customers people to purchase government treasury bills and is always questioned. The ethical, negative or wrong development stocks which is a sufficient ingredient performances form the focus of this paper. What are in boost investment in the Nigerian economy. they, and how can it be corrected. - They facilitate business transactions by making the Ethics in the context of this paper involves on use of cheques, bank-drafts and other financial what is right and wrong, or moral conduct pertaining to documents possible. Ogunbi and Ogunseye(2004). any aspect of the performance of the banking functions - They assist in providing short, medium and long in Nigeria by the commercial banks. term loans through the creation of loans and Ethics consists of certain rules and standards of advances. This is used by the investors to develop conduct recognised as binding in a professional body or Global Journal of Management and Business Research Volume XIII Issue X Version I the productive sectors of the economy. an association. Obeng (1990). - The commercial banks invest directly in the Ethics and morality will be used interchangeably productive sectors of the economy through and considered synonymous with societal ideas of collaborative efforts and acquisition of shares in honesty, honour, virtue and integrity in matters of reputable blue chip companies. commercial banking in Nigeria. - They give technical and financial advice to their Ethical issues are principles that serve as clients in matters relating to investments, new guidelines for both individuals and organisations.

©2013 Global Journals Inc. (US) Morality refers to certain standards of behaviour certain religious sects and abhorred by others. What which makes a person to be regarded by his/her constitutes the definition of decent dressing? Does community as being virtuous or upright in character. religion have any role to play in the commercial banking Obeng(1990). industry or in determining ethical conducts? Morals are beliefs or principles that individuals Based upon these questions, controversies and hold concerning what is right and what is wrong in a dilemma about the universal, acceptability of what community or society. Clow and Baack(2004). constitutes ethical standards especially amongst the Ethics consists of certain rules and standards of professional groups. Chandan (1990) further asked a conduct recognised as binding in a professional body or number of related questions to solve the puzzle on association. The banking, marketing, legal, advertising ethical behaviour. or medical associations has certain rules of conduct that - Is there a set standard against which ethical guides the members in the performance of their standards can be measured? Or is there a professional duties to the public at large. These ethics situational code of ethics according to which the 2013 specify the duties the practitioners of these professional ethical merits of an activity or professional body can bodies owe to themselves, to each other and owe to the be measured and evaluated? ear Y

- Is the evaluation of ethical and unethical conduct(s) general public in practising their professions. Obeng,

(1990). consistent among cultures and countries? 37 Chandan, et al (1990) defined ethics as a - Does it vary from one individual to another? Who “theory of morality which attempts to systematize moral (group or person(s)) decides on what is right or judgements and establish and defend basic moral wrong? principles”. - Is it the individual(s) family, professional institutes, As this definition suggests, moral principles and associations, religious bodies (faiths) or the moral judgements are also subjective in nature and community? depend much upon the value system of an individual or Chandan (1990), Ayozie (2012), Chandan, et al society. But how do you determine the validity of the (1990), Clow and Baack (2004) opined that the concept value system of the individual or the judgement about of ethics and morality does not only differ in his/her ethical behaviour. interpretation and application, but also differs from For example, killing or lying in itself may be culture to culture, and from one community to another. unethical in some religions, but acceptable in others as With changes to the moral values over time in Nigeria,

a means of entering heaven. But killing or lying to save Ayozie (2012) reported of study in the Nigerian Guardian C a life might become ethical. A terrorist to a government (2012) Newspaper on certain subjects. () or a nation may be a killer, armed bandit or an immoral For example the issue of gay/same sex criminal. But to his own terrorist, religious or ethnic marriage was illegal 150 years ago in America, but has group, he/she is regarded as a freedom fighter or a been legalised and acceptable as a way of life and hero. Killing someone may be religiously unethical, but marriage in the United States, United Kingdom, France nations yearly decorate war heroes based upon the and other European countries, as President Obama/ number of enemies killed in war situations, or in counter Prime Minister David Cameron is forcing and cajoling terrorist activities. African countries to accept gay marriages. In churches From the above discussions, it is somehow in the western world and United States gay priests are easy to define ethics, but a bit difficult to identify what is allowed to preach and administer marital vows. But such ethical and what is not (unethical); practices are not only illegal in African countries, - How do we determine what is an ethical conduct in especially Nigeria, but morally and culturally the commercial banking industry? unacceptable by all the religious faiths, including traditional worshippers. Gambling used to be widely - Does ethical conducts in the banks have a universal condemned in the past. Now even the churches and application? individuals run baazar, bingo, auction, and lottery - Does commercial banking ethical conducts differ in games to raise fund which is a form of gambling. Pre- time and from one bank worker to another from one marital sex was a taboo and morally unacceptable in the time duration to another? past. Today, couples live together and have children - Does the concept of ethical conduct in the bank outside wedlock/marriage (live-in-lovers) or live as Global Journal of Management and Business Research Volume XIII Issue X Version I depends on the religious background of the partners. sponsors or owners of the banks? So how do we determine the validity of the value - Does ethical conducts in banks vary with time? system of the individual or the judgement about the These questions and many more becomes very ethical behaviour? expedient because the wearing of clothes (mini or maxi In different countries and economies there is a skirts, trousers and certain blouses are tolerated by lack of consensus about what is an ethical conduct.

© 2013 Global Journals Inc. (US) Consensus notwithstanding, I will identify banking Crimes Commission (EFCC) for this type of sundry practices, and commercial banking functions that are offences and others. EFCC have gained convictions and susceptible to ethical challenges in the modern day assets recoveries and plea bargain from very top bank Nigeria. official (e.g. Cecilia Ibru). Many bank in the past have The absence of moral values that has had their banking licences revoked (Peak Merchant permeated every aspect of the Nigerian life, has equally Bank in 2004). The commercial banks recklessly and directly and indirectly affected the financial services dubiously converted FIRS cheque valued at Billions of industry and in this case the commercial bank. The Naira. The bank officials exploited the loopholes in the

customers and the public believes that majority of the clearing system to divert funds into accounts other than malpractices, bank frauds, and dishonesty in the that of the payee stated in the cheque. The clearing commercial banks are perpetrated by insiders or with process which is only known to the bank workers, only the very active connivance of the bank staffs and confirms that the drawer‟s account is debited and outsiders (customers). The multiplication and spread of funded. There was no control outside the collecting

2013 bank frauds, unethical and unprofessional conducts bank to ensure that the proceed and funds is credited presently in the commercial banks and within all the

ear into the right account. Because of the prevalent moral Y cadres of bank staff (Directors, Seniors, Middle and decadence in the Nigerian society and low ethical Lower Bank workers) is gradually eroding the public standards, this obnoxious malpractice thrives in the 38 confidence in the Nigerian banking system. commercial banks. Some financial institution and commercial banks engaged in name-dropping of

reputable multinational and blue chip companies to raise fictitious commercial papers and the funds are Unprofessional and unethical practices and later converted for other personal and non-banking behaviour are summarised as the abuse of the needs. confidence, trust and interest the customers and public c) Outright Breach of Trust reposes in the directors, managers and staffs of the Some commercial banks have in the past commercial banks. dishonoured their own managers cheques. This These unethical practices are reflected in exemplifies the poor internal control system of the various forms and levels in the commercial banks Donli commercial banks although they might claim to have a (2004), Ayozie (2012), Business Day (2004). Some and genuine reason for their actions. Banks have also out- by no means the exhaustive unethical practices include rightly refused to perform on crystallised guarantees, the following: C claiming that it will amount to loss. () a) Having Undue Access and Tampering with the Customers‟ Accounts d) Commercial Bank Frauds Frauds can be described as a conscious There had been reported cases in the print premeditated action of a person or group of persons media, followed by customer complaints against undue with the intention of altering the truth and or fact for access and manipulation of their accounts, both active selfish personal monetary gain. It involves the use of and dormant, by the bank staffs. Bank staffs engage in deceit and trick and sometimes highly intelligent unauthorised withdrawals from customer‟s accounts, cunning skill. The action usually takes the form of unauthorised overdrafts, unauthorised lodgements and forgery, falsification of the documents and signatures. It operations of the account, fictitious charges, payment of also involves outright theft. Employees and customers cheques and other banking instruments of commercial of banks engage in certain degrees of fraudulent bank personnel against customer accounts, and the practices throughout the world. Fraud is not an inhuman operation of fictitious accounts, or operating the behaviour. accounts of dead bank customers. In most case Perry (1984) examined fraud and forgery as not customers that have relocated overseas or to other part only forging of another person‟s signature, but also the of Nigeria, have had their bank account closed or made act of counterfeiting of coin, notes or documents, dormant. Customers who for job loss, have not operated falsifying a document whether in a material particular or their accounts for sometimes, have had their accounts in copying of another person‟s signature or illegally make dormant by some dubious bank workers. To using another person‟s signature. conceal most of these atrocities, commercial bank Global Journal of Management and Business Research Volume XIII Issue X Version I Randiwkz (1979) classified fraud with white workers of different cadres engage in the manipulation collar crime and defined them as illegal acts of book keepers throw-out-items operated unethically characterized by deceit and concealment, force or and dubiously just for account reconciliation. violence or threats thereof within the broad class of b) Conversion of Cheques or Cheque Conversion white collar crime. Many bank directors and top management staff Young (2002) hunted of the ample evidence have been prosecuted by the Economics and Financial which exists to show that individual integrity of those

©2013 Global Journals Inc. (US) managing/running the commercial banks are not a insider frauds in the commercial banks involves higher level now. Ogwuma (1985) stated that although falsification, lying, exceeding authority, violation of the existence of frauds in the banks is not an the bank/employers policies embezzlement of the uncommon or unexpected behaviour, its prevalence bank funds using in the form of cash or other now is very worrying. assets. The term fraud is defined in different ways by Boniface (1991) some of the manifestations of different authors. Boniface (1991) defined fraud as “any employee frauds in the commercial banks includes the premeditated act of criminal deceit, trickery or following unethical practices; falsification by a person or group or persons with the - Suppression of cash/cheques. intention of altering facts in order to obtain in due personal monetary advantage. It usually involves the - Computer fraud which takes the form of alteration of perpetration of some forgery or falsification of the programmes or application packages, or documents or illegal authorisation of signature. The bursting into the computer system through remote 2013 certified fraud examines in Adeyemo (2012) defines sensors. Diskette or flash drives can also be tampered with by bank employees, so as to gain fraud as illegal acts characterized by deceit, ear concealment or violation of trust. These acts are not access to unauthorised domains or give credit to Y

accounts for which the funds were not intended.

dependent on the application of threat of violence or of 39 physical forces. Frauds are normally perpetrated by This kind of fraud can remain undetected for a long individuals and organisations to obtain money, property period of time. or services to avoid payment or loss of services or to - Diversion of fund by bank staff. Here the bank staff secure personal or business advantage. The Collens diverts customers deposits and loan repayments, English in Adeyemo (2012) defined fraud as “deceit, tap customers funds from interest in suspense trickery, sharp practice or breach of confidence, accounts from the banks. perpetrated for profit or to gain some unfair or dishonest - Cash thefts from the Tills and ATM machines by advantage. Ojo (2008) concluded by stating fraud arises banks staff, or with connivance by the bank staff. when a person in a position of trust and responsibility - Stuffing of fake/counterfeit currency notes in ATM digresses from some agreed standards, breaks the machines by bank employees. rules to advance his personal interest at the expense of the interest of the public (customers). - Forgeries of customer‟s signatures with the intention From these definitions, it is apparent that fraud of illegally withdrawing money from the account with

the bank. C

is a noticeable unethical practice by a privileged bank () worker who takes undue advantage of a vulnerable/ - Using forged cheques to withdraw money from weak customer. Frauds have many classifications but customers‟ accounts. this paper restricts the classifications to four noticeable - Opening and operating of fictitious account to which areas. Adeyemo (2012) classified them as; illegal transfers could be made and false balances a) Insider non-management fraud – These are credited. perpetrated mostly by bank employees. - Claiming of overtimes for hours not worked. b) Outsiders/Insiders – This involves the collaboration - Lending to fictitious borrowers affected through of the bank staff and outsiders as explain below. fictitious accounts opened at a branch of the bank. c) Outsiders fraud – This includes the customers b) Outsider/Insider fraud – This involves a collaboration and/or non-customers of the commercial banks. of bank employees/staff and outsider and d) Management frauds – This involves the customers for the purpose of defrauding the bank. management of the commercial banks. For any bank outsider/customer to succeed, more For the purpose of this paper which involves the often than not, there must be an insider who is unethical challenges of commercial bank works, the providing information and other logistic support to the outsiders to succeed. (Adeyemo, 2012). insider, outsider/insider, and the management frauds would be explained. This discussion is just to reveal the c) Management fraud – This type of fraud is normally unethical challenges facing the commercial bank committed by the management staff of the banks,

workers. which normally comprise of the board of directors, Global Journal of Management and Business Research Volume XIII Issue X Version I a) The insider or non-management frauds are chairman, directors, managing directors and perpetrated by the employees and non- general manager. This is an embarrassing management staff of the commercial banks. This unethical practice as funds are held in trust for the entails the application of fraudulent means to obtain investors by top management. The victims of this money or other property from the commercial bank. fraud includes the investors and creditors, and the Robertson (1996), Olatunji (2009) included that medium for perpetrating this fraud is through the

© 2013 Global Journals Inc. (US) financial statement. The reasons for this type of a) The endogenous/institutional factors which covers fraud includes the „painting/showcasing the bank the focus of this paper and are unethic al practic e by in good light in the eyes of the regulatory the bank staff are; bodies like CBN, NDIC (Nigerian Deposit - Poor book-keeping by bank staff. Insurance Corporation), NASB (Nigerian Accounting - Genetic traits – which are trans-generational (or Standards Board) and the need to pull in more inherited) attributes possessed by the staff, that investment from both the existing and potential propels them (him/her) to engage in bank frauds shareholders of the organisation. Management e.g. some inherited it from their parents, or always commit this fraud which is an unethical pathological kleptomaniacs who steals just for the conduct. fun of it or for conquest are not suited for Fakunle (2006) defined management fraud as professional bank jobs. the manipulation of records and accounts typically by - Inadequate infrastructural facilities, e.g. poor the commercial bank‟s senior staff with a view to communication systems and incessant power 2013 benefiting in some direct and indirect ways. Deception failure results to a build-up of unbalance postings.

ear and deprivation are the main elements fraud, and - The overcrowding of office space(s) encourage Y management fraud satisfies this requirement. staffs to commit bank fraud. 40 Ajisebotu (2006) stated that management fraud - A weak accounting and poor weak internal control has some basic elements which are; system. - Ineffective/poor internal auditing system. - The damage suffered by the victim. - Inadequate supervision of subordinates by - A material false statement. superiors. - Knowledge of the falsification (statement) and lastly - Staff disregards for (“KNC”) Know your customer the reliance on the false statement by the victim rule. (customer). - Poor data base management and information communication technology (ICT). The Association of Certified Fraud Examiners - Conflicting, ineffective, and helpless personnel (ACFE) opined that this fraud manifests itself through overstatement of assets and revenues or policies. understatement of liabilities and expenses, but is - Disparity in the salary structure between certain normally carried through five methods; categories of staff with almost te same qualification e.g. HND and BSc graduates. C

- Concealed liabilities and expenses, () - Poor salaries and conditions of services. - Fictitious revenues, - General frustrations occasioned by management - Improper and or inadequate disclosure unfulfilled promises to the staff and the bank union members. - Improper asset valuation - The employee/staff refuses to abide by laid down - Timing differences procedures, including sound ethical conduct, and d) The outsiders frauds are perpetrated by customers most times without any sanction or penalty. and non-customers of the bank and the common - Failure to engage in regular call-over. methods according to Onkagha (1993) are; - The commercial bank‟s reluctance to report fraud advance fee fraud (a.k.a. 419), forged cheques, and place a disclaimer on convicted ex-staff due to cheque kitting, account opening fraud, counterfeit the perceived negative publicity and destruction of securities money transfer fraud, letter of credit fraud the bank brand/image. This encourages more fraud. and clearing house fraud. - The banking experience of employees. Commercial bank frauds occur more and at a higher rate of recurrence among staff with little experience and knowledge in financial matters. The more experience and knowledgeable a bank employee is, the less probability that frauds would pass such staff Ojo (2008) classified the causes of fraud and undetected unless with the active support of that staff

Global Journal of Management and Business Research Volume XIII Issue X Version I forgeries in commercial transaction, under to generic (Adeyemo, 2012). factors. The causes include the unethical involvement of The literature of Alahi (1994) identified fraud commercial bank staff which is the focus of this paper. two classifications are: Ojo (2008), Endogenous or causes under two headings or classifications. These institutional factors and Exogenous or environmental are; This applies more to the institutional factors. The i. Institutional factors factors. ii. Societal environmental factors

©2013 Global Journals Inc. (US) The institutional factors are those are traceable affected as customers‟ morale is low. The loss of to the internal environment of the commercial bank, money lead to reduce level of resources, which while the environmental/societal factors include those hampers the operation of the bank and this might outside the banking industry. lead to loss of patronage.Other effect includes loss Some of the common causes in Alashi (1994) of of confidence in banks by the customers. So a the institution fraud factors are; commercial bank should set good ethical conduct - Inadequate infrastructures. aimed at promoting a healthy banking habit, which - Delays in procuring documents. will be profitable to the bank and to the customers (Ayozie, 2004). - Lapses in management control systems of corporate customers. Majority of the commercial banks have been affected by one form of bank fraud or the other, by - Negligence by the customer. insider bank staff. Bank frauds come in various degrees - The huge volume of work done by the staff, which and forms, and have been committed by bank staff at 2013 makes it difficult to detect the bank frauds by staff. every level, but the greatest fraudulent acts are generally - Few bank workers, doing heavy volume of work. perpetrated by the experienced bank staff of most ear - Low banking experience of workers. commercial banks who have gained sufficient Y

knowledge, trust and control over a specific area, - Inadequate/lack of training. 41 department and branch of the commercial banks. The - Very poor management/management style. risk to the banks reputation in the nation due to bank - Poor recruitment system. fraud is not quantifiable, but mostly enormous, so the - Poor security arrangement. risk to the image of the bank by bank staff who engages - Unnecessary use of sophisticated accounting in fraud should be an ongoing concern. The saving machines, making human interaction and grace is that most of these bank losses occasioned by supervision minimal. bank frauds are covered by the relevant insurance policies. There have been reported cases of commercial - Frustrations on the job and lack of motivation to bank forgeries and fraud which is on the steady work. increase. The losses that emanated from such - Lapses in the management control systems of fraudulent practices as payment on forged instruments, corporate customers. diversion of customer funds into other accounts, The societal/external environmental causes are; especially those owned by the bank staff and their C

- Slow and tortuous legal processes delays in the accomplices, defalcations, illegal transaction in

() prosecution of fraud cases. A frustrated party due travellers cheques using active and dormant customer to long adjournments and delays might likely accounts without necessary authority and approval, and abandon a case, and this will lead to miscarriage of recycling of cheques, are most common cases of fraud justice. and unethical practices by the bank staff. Most banks - Non/late reporting of frauds to the police or because of image, reputations and customer perception supervisory bodies. failed to report cases of fraud and forgeries to the - Societal emphasises on wealth and money as a relevant authorities like EFCC, CIBN, CBN, and to the symbol of achievement. Ayozie (2012) Nigerian police authorities, as the actual quantum of - Low societal values/moral. commercial bank forgeries and fraud in the system - Lack of specialised manpower (i.e. forensic yearly, far exceeded the figures reported by the Nigerian investigators) for the investigation of fraud. media. In majority of these cases, there were the actual - Lack of effective punishment/deterrent. involvements of insiders, most who are bank staff, and - Fear of negative publicity to the banks. experienced directors of the bank. - Frequent adjournment of court processes. This c) Credit Facilities Granted Internally (insider related night frustrate an applicant and favour the credits) defendant who committed the fraud. The Banks and Other Financial Institutions Act - Fraudulent activities of prosecuting officers and (BOFIA 2002) provides against the abuse in granting connivance with the judges to release some credit to insiders in a commercial bank or financial

defendants accused of fraudulent activities. institution. The Act (2002) defines who a director is, and Global Journal of Management and Business Research Volume XIII Issue X Version I - Unnecessary and abuse of the plea bargaining the specific conditions for granting credit to such process by the bank workers and prosecutors. persons. This and other measures by the regulatory b) In all the classifications of fraud, the authors all authorities notwithstanding, non-performing insider agree that fraud leads to loss of money which related credits more than any other factor, accounted for belongs to the customers or the bank. The image the collapse of most of the commercial banks that went and reputation of the bank is also negatively into liquidation and some other ones that were

© 2013 Global Journals Inc. (US) recapitalised in the last ten years. It went so bad that commercial banks evacuating cash from their bank one or two directors accounting for over 90% of a bank‟s vaults, and using that to obtain drafts of other banks for entire loan portfolio. Even when the danger of such the sole purpose of acquiring shares in the bank. concentration is brought to the notice of the bank directors (perpetrators), there is obvious reluctance to g) Over Ambitious and Unrealistic target setting for bring the indebtedness down to within the single obligor bank staff (Females in Particular), Unrealistic profit limit. Business Day (2004). This practice is made more and Liability Targeting by the Commercial banks It is the practice in most commercial banks virulent by concealment which the regulators might not detect early enough, until the health of the bank has especially the new generation banks, who set been terminally impaired. There is also the practice of unrealistic, unattainable and unachievable goals, profit endless role-over of non-performing insider credit at very and liability targets for their staff, most especially for the ridiculous lower rates of interest, to favour the young, mobile, pretty female staff. These includes perpetrators. mandating the females and in most cases the males to

2013 mobilise 100 new customers in a week or month, with a d) Dealings in Securities by Insiders (Bank staffs and ear clearly, specified proviso that the staff might not have Y their associates). Insider Dealings in bank Securities his/her appointment confirmed if the unrealistic targets With the crash of Enron, Worldcom, and the 42 is not met within the time limit. Most female staff have liquidation of most prominent commercial banks in been given the target of mobilizing a minimum of N10m Nigeria, there is now the revelation of unreasonable per week, with the confirmation of appointment and exuberance in the capital market. The crash had a probably the promotion tied to this unachievable high tremendous impact on the U.S. and Nigeria capital achievements and targets. A lot of female staff have markets, with the revelation of insider dealings, including been sexually assaulted, raped and killed all in a bid to abuses relating to stock options. The Securities and achieve the targets, and most have lost their jobs Exchange Commission (SEC) in the past ten years had because of the difficulty in achieving such targets. black listed many employees of various stock broking Commercial banks through the use of „cost of funds‟ as firms for gross insider abuses and unethical and identified in their books have abused the payment of unprofessional activities, which includes clothing shares brokerage to bank staff, based on the principal sums of multinational and blue chip companies and selling mobilised. To retain their banking jobs, and ensure the shares to the uninspecting members of the Nigerian progress in their career, bank staff resorts to unethical public. There are also reported cases where commercial and unwholesome practices, like “corporate pro- bank staff engages in unethical and authorised

C stitution” and sleeping with their clients, so as to attain

() purchases and sales of securities, placement of bank funds by treasury offices in real, phony finance houses this unrealistic targets, while at the same time keeping and terminally sick banks, and engaging in unauthorised their eyes open for greener pastures. In such an lending to distress borrowers for their family and atmosphere and situation, survival of the fittest is the personal gains. watch word, where ethics, morality, dedication and professionalism are thrown to the waste bins. e) Unauthorised Tampering with Customers‟ Accounts There had been reported cases by bank h) The Non-observance of know your customer Procedures customers on the manipulation of their personal or The standard practice universally in commercial corporate accounts by bank workers. This includes banking is that the staffs and the banks must know their unauthorised withdrawals of funds from customer‟s customers. This is often breached when accounts are accounts, fictitious charges, unauthorised overdrafts opened by proxy, or when a person that is unknown by and payment of cheques of bank personnel against the staff or the bank opens an account, especially in this customer accounts or fictitious account so to conceal era of aggressive marketing and deposit mobilisation to these nefarious atrocities, bank workers engage in the meet the unrealistic and unachievable targets. The manipulation of book-keepers thrown-in-item, computer surrounding implication, is that such accounts could be rejects and other items needed for account used for nefarious/ dubious transaction transactions reconciliation. illicit trade, money laundering and terrorism, and then f) Meeting the Commercial banks Capitalisation abandoned without the banks being able to trace the

Global Journal of Management and Business Research Volume XIII Issue X Version I Requirements owners of such accounts. Having sufficient information The Central Bank of Nigeria (CBN) does not about the customers and making use of that information accept borrowed funds for bank capitalisation. is the most effective strategy against the usage of back Evidences abound in the recapitalised commercial accounts for illegal activities such as money laundering banks verification that the Director and promoters and for terrorism. In addition to minimizing the risk of disguise borrowed funds, just to satisfy the requirements being used for illicit and other nefarious activities, this of recapitalisation. There are also reported cases of protects the bank against fraud, reputation and other

©2013 Global Journals Inc. (US) financial risks, and enables individual commercial banks upon engagement, signing – on bonuses and foreign to recognise any suspicious activities and accounts. holiday trips for the workers and their families. This This made the CBN in the past to introduce the concept invariably leads to an excessive rise in the banks “know your customer – (KYC)” manual for commercial operating costs. Poaching if not properly checked can banks and other financial institutions in Nigeria. Not be injurious to the operations of the commercial banks minding these procedures enumerated above, a lot of that have suffered the “brain drain and head hunting commercial banks deals with unknown individuals, activities. (Business Day, 2004). These commercial customers and corporate bodies that brings to the banks; are left with the additional burden of having to banks very large cash deposits, running into billions of recruit and train the staff, and having to wait for a long naira, and which are never reported to the CBN, ICPC, time before these staffs become experienced enough to NDLEA and the EFCC as required by the law, and the master the jobs. Critical and very useful secret and open new cash life banking policy. Such unknown accounts information can later be used as a competitive strategy, have been used for illicit activities, including terrorism, which will be taken from the old company to the new 2013 drug trade and money laundering, after which the one. There is also the problem of the appointment of owner(s) go underground without a trace. employees/staff who lacked adequate banking ear

experience and qualifications for the position offered Y

i) Deceptive Advertisements and Opening of New

them. This invariably discourages the commercial banks

Branches : from training their staff, and consequently the overall 43 Section 6(1) of BOFIA Act (2004) (as amended) skill level of the banking industry is affected. Most categorically states that “no bank may open or close commercial banks do not follow rigorous employment any commercial bank branch office anywhere within or and interview processes. Employments are based outside Nigeria, except with the prior consent in writing solely on the Director‟s/Sponsor‟s recommendation on of the bank. But recent event events have made gold platted complementary cards and not on mockery of the law as there are several cases of academic/professional qualifications or experience on commercial banks opening cash centres, ATM centres the current or previous jobs. Other employees are and branches without getting the approval of the Central recruited based on the sexual relationships between the Bank of Nigeria (CBN). Some branches operate for bank director and the employees. This invariably has some years before their requests for approval are affected the ethical conduct of such unqualified staff. forwarded to the Central Bank of Nigeria (CBN). Also Another problems is the running down and bad there are numerous cases of acquisition of properties, mouthing of competitors through deliberate shares in companies, establishment of subsidiaries, misinformation on mass media, and the internet, such C without getting the prior approval of the CBN. In most of () as the circulation of phoney/false list of distressed the cases, these commercial banks did not have the banks, misuse of confidential bank/customer necessary free funds to support their investments. Not confidential information gained through banking minding the clear guidelines by the CBN and the operations and interactions with other in the banking Advertising Practitioners Council of Nigeria (APCON) in industry. respect of financial adverts and financial sales promotions, there were many deceptive adverts in the k) The late/non Remittance of duty Collections and vat past, on sales promotion, and non-existing products, Most commercial hardly comply with the and adverts that did not reflect the realities on ground. requirement that they should remit the custom duties Many commercial bank adverts use exaggerated claims and VAT (value added tax0 to the Central Bank of and puffery, Ayozie (2012) e.g. a new/or marginally Nigeria (CBN) with the stipulated period of one week capitalised bank describing itself as very solid or the first (seven days). The CBN and the federal ministry of to introduce certain non-existing products. The CBN and finance had in the past blacklisted some commercial APCON have had cause in the past to stop some banks who delayed remittance or deliberately hold on to financial adverts by advertising agencies, on behalf of government funds of VAT and custom duties. This is their client i.e. the commercial banks. clearly a breach of law and contract and is considered an unethical practice. j) Unhealthy Competition and staff Poaching among the Commercial bank l) Balance Sheet Engineering The continuing expansion of the banking Business Day (2004) – Most commercial bank Global Journal of Management and Business Research Volume XIII Issue X Version I system at a pace faster than the development of have this problem of transparency and accountability. competent hands results in undue competition for There are reported cases of deliberate rendition of available experienced employees/bank staff (Business inaccurate returns to the regulatory authorities like the Day, 2004). This leads to staff poaching, head hunting state or federal ministries of finance and the Central and excessive inducement in the area of remuneration Bank of Nigeria (CBN), with the intention and purpose of and other perquisites (Jumbo housing grants/loans, misleading them, and benefit from such deceit. The

© 2013 Global Journals Inc. (US) commercial banks manipulate their balance sheets with currency notes by the ATMs is made possible with the intent of concealment of deposits to reduce cash the connivance of fraudulent bank staff and their reserve requirements reclassification of loans to other external accomplices. The Get Rick Quick sectors of the economy as lending to the real sector, so Syndrome prevalent in the society has entered the as to benefit from the lower cash reserve requirements banking profession, making bank staffs to partake of 9.5% (per cent) instead of 12.50% (per cent). They in printing and distributing counterfeit currencies. also conceal to avoid liquidity ratio penalties, for the p) Strong ethical orientation and training will inculcate deceitful purpose of understanding the volume of in the bank staffs, the virtue of honesty, hardwork deposits in order to evade insurance premium payable and fear of God. Currency counterfeiting is not only to the Nigerian Deposit Insurance Corporation (NDIC). illegal, can lead a staff to jail on conviction, can also In the past, the NDIC sought the assistance of the CBN adversely affect the image of the individual to debit the accounts of some commercial banks that concerned and the corporate image of the bank.

refused to pay the insurance premium due, after the Also, it is recommended that for every 5 – 6 years, 2013 discovery of hidden deposits by banks examiners and the federal government, through the CBN has to re-

ear finally for the classification of balance sheet items as off- design the currency notes, because after that Y balance sheet items. period, counterfeiter tend to catch up with the 44 m) Indecent Dressing by Bank Employee printing of fake/counterfeit currencies. The banking industry by nature is a conservative q) Commercial bank management should collect place that has a peculiar but acceptable decent type of current and relevant references about the staff. dressing both for the males and females. Very recent These references should be constantly updated. The only caveat is that references are more relevant observation reveals that young female graduates have been given over ambitious and unrealistic marketing the time/day it was given because an honest worker targets. In a bid to mobilise funds and meet up with the in the bank today might change due to societal or unrealistic targets, they wear “micro mini skirts” and peer influences. some revealing tops just to entice their male clients and

use that as an avenue to meet up with the fund targets. Many staff have been sexually harassed and abused because of the indecent dressing. The male counterparts tattoo part of their bodies, wear tight fitting

trousers and polo shirts so as to entice their rich female

C In order to improve on the ethical climate in the

() clients. Clients have complained of this unconservative and unethical dressing by all categories of bank staff, banking industry, a plan of action is necessary, and this who is a bid to mobilise funds among their clients with plan of action can be categorised into three different their dressing. levels and areas where each level has a significant contribution towards the formation of the entire ethical n) Foreign Exchange Malpractices system. Ayozie (2012),Donli (2004), Business Day Most commercial bank officials used the foreign (2004). Some of these measures are contained in some exchange for sharp malpractices and as an avenue to cases the financial and advertising laws, and the ethics, get rich quick. They do this by; (i) selling forex to and code of conduct of the Chartered Institute of customers without the customers having the required Bankers of Nigeria (CIBN), the Advertising Practitioners cover for such bids or selling to ghost customers who Council of Nigeria, the National Institute of Marketing of did not even apply for the forex, (ii) round tripping Nigeria, the Central Bank of Nigeria (CBN) and the practices involving suspicious dubious documentations EFCC manuals on financial institution, amongst many to support the opening of foreign exchange accounts by others. either customers or bank workers.

o) There are growing incidences of fake currency either printed, distributed and inserted to be dispensed in the Automated Teller Machines (ATM). The Central Bank of Nigeria (CBN) Governor Sanusi (2013)

Global Journal of Management and Business Research Volume XIII Issue X Version I provided an alarming figure of the growing trend of The individual bank consumer can do a lot to currency counterfeiting in Nigeria. Recorded protect him/herself from the effects of the unethical and counterfeit notes per one million pieces processed misleading adverts and banking influence. We have to were about 3.9 pieces in 2007, 6 pieces in 2008, 8.4 understand that all customers do not react to the same pieces in 2009, 7.3 in 2010, 5.4 in 2011 and 8.4 stimulus in a similar manner. Hence, morally offensive pieces in 2012. The dispensing of this fake Nigerian dressings, and advertisements must be so considered

©2013 Global Journals Inc. (US) after an objective evaluation of the intent and content commercial banks and also check the truth, of any financial/misleading advertisement, or the decency and legality of financial advertisements. expressed intent of any male/female bank worker who Such regulatory body includes the CBN, APCON, dresses provocatively or unethically. This means that SERVICOM, CIBN and the Consumer Right the advertisement or the style of dressing must be Protection Agency of Nigeria. These bodies could explicitly manipulative and provocative, and the assist in getting some remedial action from the consumers morally and ethically balanced so as to be commercial banks for the customers, if there is a consciously aware of such intended manipulation and justified reason(s) for it. provocation. Chandan, et al, (1990), Ayozie, (2012). f) Write to an appropriate superior in the commercial Based on these assessments, a bank consumer has bank, or make a verbal complaint about an many alternatives to choose from. These are; unsatisfactory product or service by the commercial bank to a superior authority in the banks. The a) If the customer believes that the financial attention given to the complaint and the remedial advertisement is misleading, dubious or contains a 2013 actions recommended by the superior authority will non-existing product, or if the sales promotion is determined whether the complaint could be taken deceitful, he/she may stop patronising the bank, ear

further or resolved at that particular point. Y

start with a boycott of their services and advice g) Finally, the customer can see a solicitor or lawyer for

his/her friends to act likewise. Simply they will an individual or group action suit, depending on the 45 engage in consumer boycott of the banking problem. This can be expensive and time services. If there are sufficient numbers of people consuming, but if the complaint is a very serious thinking in the same manner, then the commercial one, like the tampering of personal accounts or bank will get the message, change the misleading lodgement of suspicious funds for money advertisement or sales promotion, so as to win back laundering, then it can be a very useful action. For the loyalty and confidence of the bank customers. There had not been any noticeable customer example, if money have been lodged and debited boycott of any financial/banking service in Nigeria. from an account without the owner‟sconsent, such b) The customers should write to the commercial bank account owner should report such transactions to to lodge their complaints. The customers the bank, senior staff, the regulatory body or to the individually or in consortium with other customers or Nigerian Police. consumer groups may write to the bank, APCON, CIBN, or CBN raising the issues in a specific way. C

The writer had had cause to complain to the () This is the most important level of which the BARCLAYS Banks in London and NATWEST Bank, management of the commercial banks can play an and the complaints were promptly looked into and important role in shaping the ethical climate of the resolved satisfactory. Most reputable banks and banks. Very top management and experienced bankers their managers take complaints seriously, and take should play a strong ethical role models and mentors for necessary action in order to correct the anomalies, the younger ones so as to see that sound ethics and also to keep the customer‟s goodwill and permeates all the levels of the organisational hierarchy. loyalty and to maintain the brand. One way to achieve high standards of ethical conduct c) Write to a media house (print or electronic). Many for the young bankers is to set goals that are houses (print, electronics and the societal network achievable, realistic and not over ambitious, because sites) have consumer oriented columns, where they setting too high goals, unrealistic targets, or over encourage customers to lodge their banking service ambitious fund mobilisation targets might induce some complaints. They are also phone in programmes on employees, especially the females to use unethical Radio and Television stations where customer‟s methods to achieve them. This is especially true at the complaints are looked into. We have the social marketing level. The ethical concept must be clearly network sites where almost all the commercial defined and communicated at all levels, and that the banks are hooked up with and a section for FAQs management must ensure that these concepts are (frequently asked questions) and consumer respected and followed through ethically and complaints are answered via the internet. Most of responsibly. So if the top bank management and

these media houses publicly take up the cause on directors establishes a policy of ethical conduct for all Global Journal of Management and Business Research Volume XIII Issue X Version I behalf of the customers. members of staff and enforces this policy, then the best d) Write directly to the public affairs or customers opportunity exists for proper ethical conduct in complaints department of the commercial bank with commercial banking and the marketing of financial the complaint to be favourably looked into. services. In addition, without the framework of general e) File a complaint with the proper regulatory agency. organisational policies, the bankers themselves should

There are several legal bodies which oversee the develop personal st andards of ethical, mor al or relationship between the customers and the professional conduct, and abide by these norms, © 2013 Global Journals Inc. (US) without been coerced to do so. The development of to commit a more grevious bank fraud still exists in strong moral, personnel, ethical and professional code the banking sector. on the part of the commercial bankers is further e) Commercial banks should be too hard on new staff strengthened by certain motivations which are both in their failure to meet their financial obligation to internal and external. Some of these motivations are: previous employers. f) The relevant regulatory bodies like the CBN, CIBN, a) Civic Responsibility – The commercial bank as an EFCC, ICPC, and APCON should enforce their organisation and their employees (bankers) are part requirements which states banks should seek of the society in which we live and presumably they references from previous employers or last are highly respected members of the community. institutions attended before recruiting new staff into Any unethical banking behaviour would have an any position, particularly senior management adverse reflection on their integrity, reputation and positions, or junior positions where the staff will be honour. Since it is not always possible to separate exposed to huge raw cash. In the face of staff cut

2013 social life from business life. So a conflict between throat competition, many commercial banks fail to the social role and the business role would have a observe this precautionary necessary measure. At ear

Y negative impact on the banker‟s civil role to the other times, commercial banks that are expected to society. So commercial bankers consider it their give some reference to their former staff bring in bad  46 civic role/duty not to offend any segment of the blood in their responses often as a result of their community around them. They want to make sure circumstances under which the staff in question left that the customer‟s banking and financial needs are the bank. If the staff were to be excellent and was adequately satisfied and on time too. They make poached by the new bank, previous employers in sure that issues of deposits, withdrawals and other most cases delay the references or write negatively sundry banking and non-banking services are about the staff. promptly and satisfactorily attended to. g) There should be thorough meticulous and more b) Employment of Staff – Commercial banks should be professional internal and external auditing of the wary of employing new staff without obtaining financial transactions/activities of the bank staff and suitable references or aiding and abetting new staff the corporate entity. There must not be a long time in their failure to meet their financial and non-financial gap so that the dubious activities of the staff will be needs/obligation to previous employers and detected early. Internal auditing can be unannounced customers. and should be periodic. c) Legal Obligations – In order to defend and protect Bank staff personal accounts must be periodically

C h)

() the defenceless customers, some laws have been monitored to detect the diversion of customer‟s enacted by the legislature for the CIBN, CBN, money into such accounts. APCON, NIMN, etc which makes it a criminal offence i) All cases of fraud detected immediately must be to deliberately mislead the customers by false and reported to the relevant regulatory and professional non-existing claims Ayozie (2012), e.g. through institutes like the Chartered Institute of Bankers of Consumer Protection Laws, APCON, CIBN and CBN Nigeria (CIBN). A disclaimer in a widely circulated financial and advertising laws. The fear of national daily must be immediately placed so as to punishment itself would act as a deferent to most inform other staff who might be disposed towards commercial banks who would then abstain from committing bank fraud, and to act as a deterrent to untruthful, deterrent, false and misleading advertising other staff. claims. There are also legal provisions for the j) The provision on the BOFIA Act (Bank and Other consumers in case their private or corporate Financial Institutions Act) must be rigorously and accounts have been compromised. Customers have religiously adhered to. The conditions for granting right to question insider related credit facilities, insider credit must be adhered to and verified by the fraudulent transactions, fake opening of an account auditors or other senior management staff/or with a customer‟s names. Customers have legal directors who must be professional in their approach. indemnity, in case their private accounts had been Non-performing insider related credit facilities comprised by bank employees. especially those not tied to profit yielding ventures d) Banks should be cautions, patient and wary of must be discouraged. Concealment of credit facility

Global Journal of Management and Business Research Volume XIII Issue X Version I employing new staff without obtaining suitable information as well endless role-over of non- references from previous employers, academic and performing insider credit at ridiculous rates of interest religious leaders/teachers. Such references must be discouraged or reduced to the barest especially from previous employers and teachers minimum. Insider dealings on securities, insider must be cautiously verified over time. Instances abuses and other unprofessional/unethical practices about where bank workers who were sacked from must be internally and externally checked. Cloning of one bank, dubiously get work with another bank only share certificates must be discouraged.

©2013 Global Journals Inc. (US) k) Necessary internal mechanism and forensic misleading and false claims are eliminated. This will accounting must be introduced and monitored to assist the customers in making a wise choice in the eliminate the manipulation of customer‟s accounts by information they receive. Every claim made in the bank workers. Other activities that must be reduced print, electronic, outdoor, transport, internet and to the barest minimum are unauthorised withdrawals stadia adverts by be truthful and verifiable. Customer and overdrafts, concealment of bank atrocities, emotions must not be misleading. Adverts must not manipulation of book keeper‟s thrown out items, mislead, deceive and offend the customers. computer rejects and fictitious charges. s) Head hunting and poaching must be discouraged, l) The CBN measure to make cheque clearing stringent and eliminated, not minding the continuing must be maintained. There should be thorough expansion of the banking system. The available control outside the collecting commercial bank to competent hands must be encouraged to staying ensure that the proceed is credited into the right within a bank and mentor the junior ones overtime. If account. Name dropping of multi-national companies poaching is not discouraged, commercial banks will 2013 so as to raise fictitious commercial papers must be be greatly affected by the “financial brain drain”.

discouraged. Hence banks will spend so much in constant ear m) The foreign exchange unit of the commercial bank, recruiting and training of new staff. They cannot Y

especially at the headquarters must be monitored, afford the luxury of this exercise because of available 47 and manned by senior but competent bankers, who limited resources. It will also reduce the risk of understand the foreign exchange practices. Round revealing critical, but secret competitive information tripping and the use of balances on customer from one commercial bank to another. Employee accounts for the purchase of foreign currency without skills and competences will be maintained overtime if their consent must be eliminated or reduced to need hunting and poaching is eliminated. Staff will barest minimum. be committed to the growth of a bank, instead of n) Periodic verifications/checks must be done by the moving from one bank to another like rolling stones CBN to make sure that the capitalisation base of the that gathers no moss. banks are intact. Borrowed or stolen funds for the t) Commercial banks should not set unrealistic, purpose of recapitalisation must be detected early. unattainable profit and liability targets for their staff. o) All VAT, custom duties and other government money Staff should be encouraged to be hardworking, but must be remitted to the CBN within the stipulated not through unattainable targets on fund mobilisation seven days. The federal ministry of finance and the for new staff, and must especially for the females. C

Target setting must be a joint activity, set by the bank

relevant regulatory section in the CBN must enforce () this guideline. Defaulting banks must be blacklisted management and the worker. Unethical and and their names published in the media. unwholesome practices must be discouraged. p) Balance sheet engineering will be eliminated if Females should not be made to compromise their transparency in commercial banking activities are integrity just because targets are to be met. reinforced. This will eliminate the problem of Dedication and professionalism must be encouraged deliberate rendition of inaccurate returns to the amongst all cadres of workers. Aggressive deposit regulatory authorities with the intent to mislead and mobilisation must be realistically achieved, and staff benefit therefrom. Transparency will eliminate the must not be made vulnerable. shortcomes innumerable in the section under balance sheet engineering. q) The CBN and other regulatory agencies must closely monitor the activities of the commercial banks who Adeyemo (2012) opined that to guarantee an desire to open new branches either locally or effective strategies of fraud prevention and control, oversees. The cash centre or ATM (Automated Teller commercial banks are to ensure that the operational Machine) centres must also be monitored to make systems are designed with inbuilt control devices. Banks sure that the security of customers when withdrawing can reduce or totally eradicate frauds if all the control their money is guaranteed. Section 6(1) of BOFIA as devices built into the system are respected amended must be enforced. No bank must open any uncompromisingly and unconditionally. Some of the

bank cash/ATM centre without the approval by the recommended measures are; Global Journal of Management and Business Research Volume XIII Issue X Version I CBN as recommended in the BOFIA Act. All cases - Hiring honest, genuine, hardworking and sincere of acquisition of properties, shares in companies‟ people – Banks needs to hire honest and sincere establishment of subsidiaries must be with the staff, because the cost of hiring a dishonest staff is approval of the CBN. incalculable, especially to the brand and to the r) All financial adverts must as a matter of urgency be image of the bank. A dishonest staff will undermine vetted by the CBN and APCON, to ensure that any attempt to create a positive work environment

© 2013 Global Journals Inc. (US) and constantly strive to defeat any internal control conduct, laid down policies and procedures which put in place (Adeyemo, 2012). will make them operate in the best interest of the - Pre-employment back ground checks, especially bank. It opens a line of communication between the the criminal records checks (CRCs), educational employees and management of the commercial history checks, previous employment verification, banks and guarantees positive staff recognition, family background and civil history for possible law sound reward system, greater motivation to perform suits, will be helpful in hiring honest people. This and productivity. A favourable work environment must be done thrice and not once for a proper that has a fair, honest and positive reward system honest report which can be used for employment. has the tendency of reducing the act of internal and - Exemplary – The top management of external bank fraud. the bank must set an excellent ethical standard to be followed by other bank staff. Every staff no matter how highly placed should be governed by

2013 Even though all the measures and motivations the same ethical standards rules and regulations of enumerated above are adequate to encourage ethical ear the commercial bank, and the banking professional standards among the commercial bankers, there are Y body. some self-personal policing activities that will further 48 - There should be adequate and constant training ensure that bank staff operates within the accepted especially in frauds and ethical standards. code of conduct. These self-policing/personal ethical - The judicial process should be reinforced in the measures are: media to encourage speedy hearing of fraud cases, a) Being very modest in dressing when going for and the publication of such cases will act as a official assignment especially for fund mobilisation. deterrent to other staff, who might wish to engage in This is very essential for the ladies and young male fraud. bankers. Workers should not over or underdress. - Performing announced and unannounced audits Dresses should not be too revealing, or showing the checks (internal and external audits) – There should cleavages of the females so as not to discourage be regular/periodic assessment procedures by all the concentration of the customer especially the commercial banks, and this must be complemented males. The perfumes if used must not be too with uncustomary random announced and choking or overbearing. Party shoes and clothes unannounced financial audits and fraud must not be worn to work. The banking job is a assessments (Adeyemo, 2012). This helps to conservative one, although dynamic, but the

C unearth any vulnerability and appraise the dressing must be within the acceptable societal

() effectiveness/effectualness of the existing controls norms, so as to reduce sexual harassment among and send the message to all bank employees that the vulnerable workers. fraud prevention and control are of high priority to b) Bank staff of all cadres must strictly adhere to the the commercial bank. code of conduct set by the CIBN and their - Probing every unpleasant major or minor allegations respective banks. Such will maintain the integrity of fraud – A timely, meticulous, and honest and brand image of the bank. Constant training investigation of any allegation of commercial bank and reminders on the ethical issues must be fraud, direct to internal control and warning signals periodically given to all workers (senior, middle and of frauds will give the indication that frauds are not lower level workers). treated with kid gloves by the commercial bank. c) Financial motivation and mentoring should be - Enforcing internal controls – Internal controls should encouraged. The senior staff must constantly be designed to promote operational efficiency and encourage the junior workers, and motivate them to effectiveness, provide reliable financial information, learn on the job and adhere strictly to strong ethical safeguard assets, and records, encourages values. “Hard work does not kill”. This will reduce adherence to prescribed policies and finally to the get rich quick syndrome of the younger staffs in comply with the regulatory agencies (Adeyemo, particular. 2012). It will also ensure that transactions are valid, d) Adequate motivation must be given and maintained properly authorized, properly recorded, properly as this will reduce the temptation of bank fraud. valued, classified, reconciled to subsidiary records Staffs must have access to decent acco- Global Journal of Management and Business Research Volume XIII Issue X Version I and done by many employees and not carried by a mmodation/housing and personal loans. Constant single staff. training locally and overseas must be introduced so - Establishing a favourable work environment – The as to increase the motivation and interest of the setting up of a favourable work environment devoid workers in doing their jobs satisfactorily. of rancour, bitterness, and jealousy, encourages a e) Whistle Blowing – Commercial bank workers must bank staff to follow an established ethical code of be encouraged to blow the whistle directly or

©2013 Global Journals Inc. (US) indirectly, by pointing out any unethical, 9. Ayozie, D. O. (1997) Successful Advertising, Danayo unwholesome or fraudulent activities which were Inc. Coy. Ilaro, Nigeria. detected in their cause of their work. They must 10. Anyanwu, J. C. et al (1997) The Structure of the immediately report to their superiors or managers Nigerian Economy (1960 – 1997) Joanee Education depending on the customer/worker complaint Publishers, Benin City. procedures in the banks. 11. Belch, G. E. and Belch, M. A. (1996) Advertising and Promotions. An Integrated Marketing Commu- nications Perspective. Irwin/McGraw-Hill Publishing, It is really difficult to identify what is ethical or USA. unethical, as this varies from one culture, society, 12. Business Day Newspaper (2004) Banking Survey: occupation or institution to another. Ethical values are Nigeria and the Challenge of Ethical Banking. situation specific and time oriented. Ayozie, (2012). Business Day, Monday 16th February, 2004, ,

Nevertheless, everyone whether in business, medical, Nigeria. 2013 law, advertising and more specifically now in the 13. Boniface, C. (1991) Fraud and the Banking Industry.

commercial banking sector must have a sound ethical The Nigerian Banker, CIBN Press Lagos. ear base that must apply to the conduct of the banking 14. Collins, G. (1985) English Dictionary, Collins Y

Polishers, London, UK. business. The writer has enumerated the problems and 49 solutions which is not exhaustive. Morals and ethics 15. Clow, L. E. and Baack, D. (2004) Integrated have been viewed as personal viewpoints, and moral Advertising Promotions and Marketing Commu- judgements are seen as meaningless expressions of nications. Pearson Education Inc., Upper Saddle emotion. Not minding the viewpoints, sound ethical and River, New Jersey, USA. moral values are very relevant both to the bank workers, 16. Chandan, J. S., Singh, J. and Machanp (1990) the customers, the regulatory bodies, and to the Essentials of Advertising.MuhamPrimilar for Oxford business world in general. Not minding the ethical and IRH Publishing Company PUT Ltd., India. challenges Nigerian commercial bankers have 17. Donli, J. C. (2004) Causes of Bank Distress and performedcreditably well, considering the unfavourable Resolution Options. Bullion Publication of the economic, political and social climate in which they Central Bank of Nigeria, AbiodunKinson Enterprises, operate in. Lagos, Nigeria. 18. Fakunle, B. (2006) Audit Companion Magazine, Lagos, Nigeria. C

19. Hassan, K. (2000) Elements of Banking, Abiodun 1. Adeyemo, K. A. (2012) Frauds in Nigerian Banks, () Enterprises, Yaba, Lagos, Nigeria. Nature, Deep Seated Causes, Aftermaths and 20. Idowu, A. (2009) An Assessment of Fraud and Its Probable Remedies, Mediterranean Journal of Management in Nigerian Commercial Banks, Social Sciences, Vol. 3. European Journal of Social Sciences, Hiton, UK. 2. Adewunmi, (1986) Fraud in Bank. Nigeria Institute of 21. Nigerian Deposit Insurance Corporation (NDIC) Bankers, Landmark Publication, Lagos, Nigeria. (2009) Annual Report and Statement of Account, 3. Ajisebutu, A. (2006) Financial Statement Fraud. Various Issues (2000 – 2009), Lagos, Nigeria. What Auditors should know? The Nigerian 22. Ogbunka, N. M. (2002) Risk and Internal Control Accountant. Management in Financial Institutions in Nigeria. The 4. Alashi, S. O. (1994) Fraud Prevention and Control. Nigerian Banker, CIBN Press, Victoria, Island Lagos. The Role of Government and US Agents.The 23. Ojo, J. A. (2008) Effect of Bank Frauds on Banking Nigerian Banker, Victoria Island, Lagos, Nigeria. Operations in Nigeria. International Journal of 5. Akon, D. (1998) Fighting in the face behind the Investment and Finance. fraud, ICSA Administrator Press, UK. 24. Olisebu, E. S. (1991) Banking in Nigeria, Signpost in 6. Adebowale, A. M. (2013) Unpublished HND Work – An Evaluation of the Causes of Bank Fraud and its the Nineties, First Bank Quarterly Review, Lagos, Effect on Organisation, Polytechnic, A Nigeria. case study of First Bank Plc, Lagos, Nigeria. 25. Olatunji, O. C. (2009) Impact of Internal Control 7. Ayozie, D. O. (2012) Ethical Consideration of System in Banking Sector in Nigeria, P. A. J. Social

Integrated Marketing, Communication in Nigeria. Science, New Delhi, India. Global Journal of Management and Business Research Volume XIII Issue X Version I Chartered Institute of Banking Journal, The Nigerian 26. Oseni, E. (2006) Across the Counter Frauds in the Bankers‟ Victoria Island, Lagos. Banking Industry and Evaluation of some of the 8. Ayozie, D. O. (2002) Buy and Read this Book. available controls.The Nigerian Accountant, Lagos, Developing, Implementing and Managing an Nigeria. Effective Integrated Marketing Communication – 27. Ogwuma, P. A. (1985) Problems and Prospects of Danayo Inc. Coy, Ilaro, Nigeria. the Nigerian Banking Industry, Seminar by the

© 2013 Global Journals Inc. (US) Financial Institutions Training Centre, Lagos, Nigeria. 28. Ogunbi, J. O. and Ogunseye, T. O. (2005) Elements of Banking.AbiodunKinson (Nig) Enterprises, Yaba Lagos. 29. Ogunseye, T. O. (2004) Principles of Macroeconomics, Theory and Applications in Nigeria.AbiodunKinson Enterprises, Lagos, Nigeria. 30. Obeng, S. (1990) Introduction to the Nigerian Legal System. Calvary Publishers Ltd, Lagos, Nigeria. 31. Oxford English Mini Dictionary, The Oxford University Press, Oxford United Kingdom. 32. Robertson, J. C. (1996) Auditing, 8th Edition, Irwin

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ear 33. Radzinwicz, N. (1979) Crime and Justice, the Y Criminal Society. Basic Book Publishers, Vol. 1, 2nd 50 Edition, New York, USA. 34. Sanusi, L. S. (2013) Sanusi Canvasses Redesign of the Naira Combating Currency Trafficking. Need for New Naira Note. Newspaper, Tuesday, July 18, 2013. 35. Shongotola, I. O. (1994) Fraud Detection and Control, Role of Managing. The Nigerian Banker, Lagos, Nigeria. 36. The Bank and Other Financial Institutions Act (BOFIA) Act (2002) in Donli, J. (2000) Causes of Bank Distress and Resolution Options. Bullion Publication of the Central Bank of Nigeria (CBN), Abuja, Nigeria. 37. Umoh, P. N. (2004) The Role of Deposit Insurance in the Financial Sector Stability, BullionPublication, C

() CBN Vol. 28, No. 1. 38. Whittington, O. R. and Parry, K. (2004) Principles of Auditing and other Assurance Services, McGrawhill, 4th Edition, New York, USA. 39. Young, M. R. (2012) Accounting Irregularities and Financial Fraud. Aspen Publishers, Aspen Law and Business Journal, New York, USA. Global Journal of Management and Business Research Volume XIII Issue X Version I

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